QUICKEN LOANS, INC., a Michigan corporation, Plaintiff-Appellant, v. William P. WOOD, in his official capacity as Commissioner of the California Department of Corporations, Defendant-Appellee.
Nos. 04-16244, 04-16312
United States Court of Appeals, Ninth Circuit
May 22, 2006
449 F.3d 944
Argued and Submitted March 14, 2006.
III. CONCLUSION
Kim has misinterpreted, whether deliberately or not, his obligations under the federal and state laws restricting the sale of pseudoephedrine. We clarify here that the recording and reporting statutes establish no safe harbor from prosecution under
There may be circumstances more marginal than this one in which that approach could yield an unfair result. Careful attention to the sufficiency of the evidence in cases under
In sum, we conclude that because it has a sufficiently clear mens rea provision,
AFFIRMED.
Douglas M. Gooding, Corporations Counsel, San Francisco, CA, for the defendant-appellee/cross-appellant.
Before ALFRED T. GOODWIN, STEPHEN REINHARDT, and MICHAEL DALY HAWKINS, Circuit Judges.
These cross-appeals involve the California Department of Corporations Commissioner‘s (Commissioner) efforts to enforce previous versions of California‘s per diem loan interest statutes. The district court held that these laws were preempted by the Depository Institutions Deregulation and Monetary Control Act (DIDMCA),
Wells Fargo Bank N.A. v. Boutris, 419 F.3d 949 (9th Cir.2005), held, after the district court had ruled in this case, that California‘s per diem statutes are not preempted by the DIDMCA. Wells Fargo controls here. The district court also held that the Alternative Mortgage Transaction Parity Act (Parity Act),
I. Background
Quicken Loans (Quicken) is licensed to engage in residential mortgage lending in California by the California Department of Corporations Commissioner. See
Quicken describes its loan process as follows:
After Quicken Loans approves a loan, Quicken Loans and its California borrowers typically complete the lending process through independent escrow companies.... Quicken Loans deposits the funds for the loan into the escrow. The borrower delivers the executed loan documents to the escrow company....
When the conditions required to close the transaction have been satisfied, the escrow company is instructed by Quicken Loans to disburse the funds to or on behalf of the borrower, and to deliver the deed of trust to the County Recorder‘s office for recordation in the public records....
....
Quicken Loans historically has instructed the escrow company to assess interest commencing on the date the escrow company disburses the loan funds directly to the borrower, or to a third party on the borrower‘s behalf.
Quicken admits that “there are occasional delays between (a) the disbursement of loan funds to the borrower and (b) ‘recordation’ of the deed of trust as interpreted by the Commissioner.” During these delays Quicken assesses interest on the disbursed loans.
Because Quicken is licensed under the California Residential Mortgage Lending Act, the Act‘s prohibition on charging interest in excess of one day prior to recordation applies to Quicken.
On March 11, 2002, the Commissioner sent Quicken a letter asserting that Quicken had violated and was continuing to violate these pre-amendment statutes. On January 28, 2003, the Commissioner ordered Quicken to review all loans it had made in California beginning October 14, 1999, and to refund those interest payments received which violated the per diem statutes. He also ordered Quicken to pay the borrowers 10% interest on the refunded interest, and to submit a report detailing the loans and amounts refunded. The Commissioner sought to revoke Quicken‘s license for failure to comply with California law. Quicken‘s First Amended Complaint alleged that the DIDMCA and the Parity Act preempt the per diem statutes, and that the per diem statutes effected an unlawful taking in violation of the Constitution‘s Takings Clause. Quicken and the Commissioner cross-moved for summary judgment.
The district court granted Quicken‘s motion for partial summary judgment on the DIDMCA claim, dismissed Quicken‘s takings claim for lack of ripeness, and granted the Commissioner‘s motion for summary judgment on the Parity Act claim.
Quicken assigns error to the resolutions of the Parity Act and Takings Clause claims, and to the denial of a permanent injunction barring enforcement of the per diem statutes to the extent they are preempted by the DIDMCA. The Commissioner cross-appeals, assigning error to the resolution of the DIDMCA claim.
II. DIDMCA
[1] Wells Fargo held that California‘s per diem statutes are not preempted by the DIDMCA. 419 F.3d at 969. Quicken attempts to argue that Wells Fargo should not be followed because it was decided by a three-judge panel rather than by the court sitting en banc, and that Wells Fargo‘s DIDMCA discussion is dicta. In general, “one three-judge panel of this court cannot reconsider or overrule the decision of a prior panel.” United States v. Gay, 967 F.2d 322, 327 (9th Cir. 1992). Furthermore, the Wells Fargo DIDMCA discussion begins with the statement that “we must decide this substantive preemption issue.” Wells Fargo Bank N.A., 419 F.3d at 967. So much for “dicta,” and Quicken cannot distinguish Wells Fargo. Accordingly, the DIDMCA does not preempt the California per diem stat-utes here. As Quicken does not prevail on the merits, an injunction is not available. See Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n. 12 (1987).
III. Parity Act
Congress enacted the Parity Act after finding that “increasingly volatile and dynamic changes in interest rates ha[d] seriously impared [sic] the ability of housing creditors to provide consumers with fixed-term, fixed-rate credit secured by interests in real property.”
Quicken asserts that the district court erred in holding that the Parity Act does not preempt the California per diem statutes as applied to alternative mortgage transactions. Quicken makes two arguments: (1) the per diem statutes are preempted because they conflict with an OTS regulation on adjustments and (2) the per diem statutes are expressly preempted because they destroy parity between federally and non-federally chartered lenders.
The Supremacy Clause provides that federal laws “shall be the supreme Law of the Land; ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.”
A. Conflict with 12 C.F.R. § 560.35
The Parity Act authorized the OTS to identify, describe, and publish those regulations that are inappropriate and inapplicable to nonfederally chartered housing creditors.
Adjustments to the payment and the loan balance that do not reflect an interest rate adjustment may be made if:
(1) The adjustments reflect a change in an index that may be used pursuant to paragraph (d) of this section;
(2) In the case of a payment adjustment, the adjustment reflects a change in the loan balance or is made pursuant to a formula, or to a schedule specifying the percentage or dollar change in the payment as set forth in the loan contract; or
(3) In the case of an open-end line-of-credit loan, the adjustment reflects an
advance taken by the borrower under the line-of-credit and is permitted by the loan contract.
Quicken contends that the per diem statutes’ prohibition on collecting interest more than one day prior to recording conflicts with
Despite Quicken‘s argument, there is no actual conflict between the California per diem statutes and the OTS regulation on adjustments. It is not physically impossible to charge no interest for more than one day before recording and to adjust payments only in accordance with the OTS regulation‘s requirements. Because commencement of interest is not a form of interest adjustment, summary judgment for the Commissioner was appropriate.
Although Quicken also contends that the Commissioner failed to meet his burden to show that there was no genuine issue of material fact regarding the Parity Act, this argument is again based on Quicken‘s conflation of a payment adjustment with commencement of interest. This is a legal rather than factual argument. The Commissioner satisfied his burden to show there was no genuine issue of material fact.
B. Express Preemption
Quicken also argues that the Parity Act explicitly preempts the per diem statutes. Quicken invokes
It is the purpose of this chapter to eliminate the discriminatory impact that those regulations [authorizing federally chartered depository institutions to engage in alternative mortgage financing] have upon nonfederally chartered housing creditors and provide them with parity with federally chartered institutions by authorizing all housing creditors to make, purchase, and enforce alternative mortgage transactions so long as the transactions are in conformity with the regulations issued by the Federal agencies.
Quicken contends that because the per diem statutes do not apply to federally chartered housing creditors, the Parity Act expressly preempts them because “such preemption is necessary to achieve parity.” The Parity Act‘s preemption clause does not preempt every state law regulating alternative mortgage transactions (AMTs), nor does the Act contain language mandating that federally and nonfederally chartered housing creditors must be treated identically in every respect under state law. See, e.g., Ansley v. Ameriquest Mortgage Co., 340 F.3d 858, 864 (9th Cir.2003) (“[T]he Parity Act d[oes] not completely preempt all California laws relating to al
C. Extent of Congressional Intent to Preempt
Quicken‘s claim, despite its identification as an express preemption argument, is better construed as an argument that the per diem statutes ” ‘stand[] as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.‘” Gade, 505 U.S. at 98 (quoting Hines v. Davidowitz, 312 U.S. at 67). This is because only by looking to Congress’ purposes and objectives could one hope to identify what “preemption is necessary to achieve parity.” Quicken does not explain what it means by this phrase, although it does distinguish it from “absolute parity,” which it does not seek.
By disclaiming the standard of “absolute parity,” Quicken implicitly concedes that the Parity Act does not preempt “all state restrictions on alternative mortgage transactions made by non-federally chartered creditors.” Quicken argues for preemption “to the extent required for ‘parity‘—not ‘absolute parity.‘” Without offering a formulation of parity for this court to adopt, Quicken argues that “the Parity Act‘s preemptive scope is not limited to state restrictions that conflict with regulations identified by the OTS.”
We are therefore asked to articulate the preemptive scope of the Parity Act. Notwithstanding
We must therefore determine the scope of the clause: “notwithstanding any State constitution, law, or regulation.”
Black‘s reasoning applies to this case as well. Here, California‘s per diem statutes do not ‘tread on’ an area of federal regulation which the OTS has identified as applicable to non-federally chartered housing creditors. The per diem statutes also do not prohibit the making of alternative mortgage 5606 transactions. That leaves the issue of impeding the making of alternative mortgage transactions. This essentially returns the analysis to its original point of determining what is ‘necessary to achieve parity‘—i.e., what impedes the making of alternative mortgage transactions.
California‘s per diem statutes apply to mortgages on real property, and do not distinguish between alternative mortgages and fixed-rate, fixed-term mortgages.
Quicken argues that because the statutes do not apply to federally chartered creditors, they should not apply to nonfederally chartered creditors. However, Congress has not delegated similarly complete authority to the OTS to regulate nonfederally chartered housing creditors.
IV. Takings Clause
Quicken argues that the district court erred when it dismissed Quicken‘s takings claim as unripe. Quicken asserts that the district court applied the wrong ripeness test.
A. As-Applied Takings Claim
If Quicken is pursuing an as-applied takings claim, it must establish that (1) “the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue,” and (2) Quicken has sought “compensation through the procedures the State has provided for doing so.” Williamson County Reg‘l Planning Comm‘n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186, 194 (1985). The district court correctly held that Quicken did not establish either of these requirements.
There is no indication in the record that Quicken sought compensation through any California procedures.
However, there are some situations in which a plaintiff need not first seek compensation from the state:
[A] plaintiff may be excused from this requirement if he demonstrates that “the inverse condemnation procedure [of the state] is unavailable or inadequate.” [Williamson, 473 U.S.] at 197. In addition, “an exception exists where the state does not have a ‘reasonable, certain, and adequate provision for obtaining compensation’ at the time of the taking,” San Remo Hotel v. City and County of San Francisco, 145 F.3d 1095, 1101-02 (9th Cir. 1998); see also Levald, Inc. v. City of Palm Desert, 998 F.2d 680, 687 (9th Cir. 1993), or where resorting to state remedies would be futile, see City of Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 710 (1999).
Wash. Legal Found. v. Legal Found. of Wash., 271 F.3d 835, 851 (9th Cir.2001) (en banc). There is no indication in the record that Quicken demonstrated that any of these exceptions apply.
B. Facial Takings Claim
On appeal, it appears that Quicken is asserting a facial takings claim that the per diem statutes do not substantially advance legitimate state interests. For this claim, “the denial of just compensation is irrelevant for purposes of ripeness.” San Remo Hotel v. City and County of San Francisco, 145 F.3d 1095, 1102 (9th Cir.1998). Accordingly, this claim was ripe when the per diem statutes were enacted. See id.
However, Quicken failed to assert this facial takings claim below. At a hearing in the district court, the district judge sought
THE COURT: What type of takings issue is involved? Is it a facial takings or an applied takings or both?
MR. SANGSTER: It‘s an applied takings, Your Honor. And it‘s an applied takings because of the manner in which the Commissioner is interpreting the statute, the recording statute.
THE COURT: Okay.
MR. SANGSTER: The Commissioner—sorry.
THE COURT: So, a facial takings is not at issue, it‘s just applied takings?
MR. SANGSTER: I guess I haven‘t thought of it in the terms Your Honor—I was expecting, when Your Honor started, whether it was per se or regulatory, and I‘m not focused as much on facial. It‘s as applied, because there is a manner in which the Commissioner could interpret this statute—
THE COURT: I have a general idea what is meant by “as applied.”
MR. SANGSTER: Yes, Your Honor.
THE COURT: I‘m trying to determine whether a facial taking is involved, and you are telling me that it is not involved. Is it involved in your complaint at all?
MR. SANGSTER: No, Your Honor.
THE COURT: So, your complaint just deals with an applied taking?
MR. SANGSTER: Yes, Your Honor.
THE COURT: All right.
The district court relied on this discussion in framing the takings clause issue in its order:
At the hearing on June 30, 2003, Quicken Loans clarified that neither its Complaint nor its regulatory taking motion asserts a facial challenge against the per diem statutes; rather it challenges the Commissioner‘s application of the statutes to the interest Quicken Loans seeks to earn on mortgage loans.[FN5]
[FN5] Therefore Quicken Loans has withdrawn any facial challenge asserted in its Complaint.
Although Quicken could have asserted a ripe facial takings claim, it expressly waived this argument.
CONCLUSION
For the reasons stated above, the summary judgment in favor of Quicken on the DIDMCA claim is VACATED. We AFFIRM the judgment denying Quicken a permanent injunction on the DIDMCA claim, granting summary judgment on the Parity Act claim, and dismissing the takings claim.
Vacated in part, affirmed in part, and remanded. Commissioner to recover costs on appeal.